Control mechanisms for risk-taking: evidence from the UK financial services industry

The significance of institutional traits when incorporating risk metrics into performance management systems (PMSs) in the financial services sector have been under investigated in the management accounting literature. This thesis explores attempts by UK and European regulators to impose controls on the PMSs of a number of regulated employees (material risk takers (MRTs)) in the UK financial services sector, in order to modify risk-taking behaviour. Additionally, the thesis investigates banks’ responses to regulatory pressures; exploring the effectiveness of controls, and initial steps, to identify the guiding principles underlying changes to the risk-taking behaviours of MRTs. It reports on illuminating differences in how new controls were implemented across various banks following the 2008 financial crisis, and how this variability impacted their effectiveness. Finally, the thesis queries the assumption that incentives are a driving force of MRTs’ risk-taking behaviour, by investigating the significant role of banks’ risk-taking cultures. The middle-range approach taken in the study draws on Oliver’s (1991) typology of strategic responses to institutional processes and management control systems theories. It does not aim to test Oliver’s theory, but rather to use her framework as a theoretical ‘skeleton’ to be ‘fleshed’ out with empirical data. Evidence was found to support several of Oliver’s ideas, including escaping from institutional pressures through concealment, and identifying areas requiring conceptual refinement. For example, the prediction that local regulators would acquiesce to demands from EU regulators is largely unsupported. Similarly, a middle-range approach is adopted when implementing management control systems theories, and used as a tool to provide theoretically informed explanations of the empirical findings.

Name dc:type.qualificationname

phd

Level dc:type.qualificationlevel

doctoral

Grantor dc:publisher.institution

University of Greenwich

Year dc:date.issued

2017

Author dc:creator

• Brickman, Karen

Advisors dc:contributor.advisor

• Otley, David
• Warren, Elizabeth

• HG Finance

Language dc:language

en